Venture Capital in Europe & IsraelVenture Investment Data: Second Quarter, 2016
Prepared by Gil Dibner
Skyline of Rome, home of over 900 churchesblog
The data• The data in this report consists entirely of data I’ve gathered manually based on
publically available, free sources
• No paid data sources or API calls were harmed in the making of this dataset, every investment was manually classified
• This allows analysis of some aspects of the data I consider important – aspects that don’t appear in other data sources
• Seed investment is still under-reported, but I got a bit better at capturing it in the fourth quarter. Rounds smaller than $500K are generally excluded from this analysis
• The analysis is limited to ICT categories and excludes life sciences
• The analysis excludes Turkey and FSU countries
• I’m converting all currencies into USD using monthly average exchange rates
2@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
Quarterly pace of venture investment• In 1Q16, Europe & Israel saw
$4.0 billion flowing into 470 venture transactions
• This set a new quarterly record for both numbers
• These numbers, and the rest of this deck, do not reflect the $1B in debt raised by Spotify in March
3@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
1,703 1,916 2,873 3,139 3,248 2,856 3,751 4,001
122
204
270 271286
357
463 470
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
0
50
100
150
200
250
300
350
400
450
500
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Am
ou
nt
inve
ste
d (U
S $
M)
Nu
mb
er
of
inve
stm
en
ts
VC Investments in Europe & Israel
Invested amount (US $M) Number of investments
Monthly pace of venture investment• All three months of the
second quarter were strong, with particular strength in April and May
@gdibnerblog: yankeesabralimey 4Syndicate for European & Israeli Enterprise Companies
90
5
97
1
997
79
1
78
7
1,5
61
1,5
17
56
8
1,1
64
1,0
83
1,0
59
71
4
1,6
61
1,0
52
1,0
38
1,367
1,4
50
1,185
92 75 103 78 95 98 11965 102 111 124 122 164 149 150 149 159 162
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2015 2016
Nu
mb
er
of
inve
stm
en
ts
VC Investments in Europe & Israel, January 2015 - June 2016
Invested amount (US $M) Number of investments
Mega-rounds skew the investment totals• This analysis breaks down VC
investments into brackets by size:
• Seed (less than $2M)
• Early venture ($2-8M)
• Venture ($8-20M)
• Growth ($20-100M)
• Mega ($100M+)
• Four mega-rounds took place in Europe this quarter – all of them consumer-oriented businesses:
• Cabify, Spanish on-demand taxi app,, raised $120M in April
• Global Fashion Group, a German online fashion retailer, raised $340M in April
• Farfetch, a British online fashion retailer, raised $110M in May
• Gett, an Israeli on-demand taxi app, raised $300M in May
• Adjusting for mega-rounds, 2Q16 was slightly below 1Q16
5@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
285 354 368 507 602 609556
716 567559
731 686
1,154 8131,513 1,187
1,669 1,643
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2015 2016
Am
ount
Inv
este
d (
US
$M)
Pace of VC Investment in Europe and Israel
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8) Seed (.5-2)
Strong year-over-year growth• 1H16 total investment volume
in Europe & Israel was up
27% over 1H16 (excluding
seed deals, where data is
more spotty)
• Early venture volume grew by
90% - almost doubling
• Venture volume grew by 11%
• Growth volume grew by 68%
• Mega round volume dropped
by 26%
6@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
6391,211
1,272
1,417
1,968
3,311
1,937
1,442
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2015 2016
Tota
l VC
inve
stm
en
t (U
S $
M)
VC investment volume in Europe and Israel by bracket
(1H16 vs 1H15)
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
Number of investments, by bracket• Excluding seed deals, the
total number of VC investments per quarter was 260 in 2Q16, just about the same as the 263 in 1Q16
7@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
6083 77 85 93
139 153 14930
26 4262 44
46
61 56
13
2633
26 38
35
45 51
3
1
6
6 4
3
4 4
0
50
100
150
200
250
300
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Nu
mb
er
of
VC
inve
stm
en
ts
VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100)
Venture (8-20) Early Venture (2-8)
Corporate VC activity, by bracket• Excluding seed deals, the
total number of corporate VC investments jumped to 57 in 2Q16
• Once again, corporate VC activity in Europe & Israel hit the highest level since this data set was started
8@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
6 4 5
16
7
2219 21
43
9
12
7
12
6
15
44
7
8
7
720
18
3
1
3
3
0
10
20
30
40
50
60
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Nu
mb
er
of
VC
inve
stm
en
ts
Corporate VC investment volume in Europe and Israel by bracket
Mega (>100) Growth (20-100)
Venture (8-20) Early Venture (2-8)
Corporate VC activity, by country• During the second quarter of
2016, Israel again saw the highest number of corporate VC investments, with 25
• The UK saw 10 corporate VC investments during that period
• Nine other countries saw corporate VC activity across Europe, but at much lower levels
• Corporate VCs participated in three mega rounds
9@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
7 63 2 1 2
8
3
1
11
1
9
1
3
3
1 1
1
1
10
5
10
15
20
25
30
Isra
el UK
Ger
man
y
Fra
nce
Swed
en
Swit
zerl
an
d
Ita
ly
Spai
n
Po
lan
d
Bel
gium
Net
her
lan
ds
Num
ber
of in
vest
men
ts
Number of corporate VC investments in Europe and Israel by bracket
(2Q16)
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
Average round size• Previously, I presented this broken
down by bracket, but I think the data is more meaningful when taken in aggregate.
• This average excludes seed rounds and mega rounds, so it reflects all rounds done in Europe & Israel between $2M and $100M
• From February to June 2015, average round sizes across all venture rounds were hovering between $10M and $12M
• The third quarter saw consistently higher average round sizes – between $13M and $14.5M on average
• In the fourth quarter, however, the trend reversed itself, with average round sizes dropping to $11M in October, $10.5M in November, and $9.2M in December
• 1Q16 was mixed: January saw a return to the large average round sizes of 3Q15, but February & March saw a return to the recent trend
• In 2Q16, round sizes started to creep up towards the $12M level
10@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
11.1
17.6
6.8
11.711.3
12.7
15.8
11.211.9
11.1
10.1
11.4
13.913.2
14.6
11.110.5
9.2
13.4
11.1
9.9
11.111.611.7
4
6
8
10
12
14
16
18
20
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Am
ount
Inv
este
d (
US
$M)
Average investment size in Europe and Israel
(Round sizes of 2-100M)
Total venture investment by country, 2Q 2016
• Israel leapt ahead of the UK and Germany to take the top spot in 2Q16 fundraising, with over $1.3B raised
• Germany was second, with $728M, ahead of the UK
11@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
1,364728
653355
211153
113108
6256
424038
271898722111
Israel
Germany
UK
France
Spain
Netherlands
Sweden
Belgium
Finland
Ireland
Switzerland
Italy
Poland
Norway
Austria
Portugal
Denmark
Estonia
Serbia
Czech
Luxembourg
Greece
Slovakia
0 200 400 600 800 1,000 1,200 1,400 1,600
Total VC investment volume by country, 2Q16 (US $M)
Total venture investment by country, 3Q14 to 2Q16
• To get a better sense of VC volumes in various countries, this analysis excludes mega-rounds
• With this filter, volumes and rankings are more consistent
• Israel has shown continued growth for the past four quarters
• The UK saw a distinct downturn in investment volume, but only compared to 1Q
• Germany has been consistently third, followed by France and Sweden
12@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
315
567543
475
628
699
963
1,064
369
267
719
437
621444
892
543
180
284
389
209
379339 333
388
29
163118
232 279225 281
355
74123
89 112
140
84
140113
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
0
200
400
600
800
1000
1200
Tota
l VC
inve
stm
en
t (U
S $
M)
Total VC investment, 3Q14 - 2Q16 (top 5 countries, excluding mega-rounds)
Israel
UK
Germany
France
Sweden
Total venture investment by country, 3Q14 to 2Q16
• To get a better sense of VC volumes in various countries, this analysis excludes mega-rounds
• The “second five” countries for VC investment were Finland, Denmark, Spain, Ireland, and the Netherlands
• Note that in recent quarters, investment trends across these countries have been whipsawing intensely
• In 2Q16, the Netherlands and Spain saw strong increases in volume
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Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
0
20
40
60
80
100
120
140
160
180
Tota
l VC
inve
stm
ent
(US
$M
)
Total VC investment, 3Q14 - 2Q16
(countries ranked 6-10, excluding mega-rounds)
Spain
Netherlands
Finland
Ireland
Denmark
Average venture round sizes, by region• Until this quarter, the data
had been generally supporting the idea that average round sizes across Europe were converging
• Data from 2Q (like data from 1Q) does not support this conclusion
14@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
Benelux, 4.5
Benelux, 18.9
DACH, 12.5
DACH, 11.1
France, 9.2 France, 8.9Iberia, 9.4
Iberia, 12.0Israel, 11.5
Israel, 14.6
Nordic, 8.0
Nordic, 5.5
UK & Ireland, 11.2UK & Ireland, 11.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Qtr4 Qtr2
2015 2016
Ave
rage
rou
nd s
ize
(US
$M)
Average investment size in Europe and Israel (rounds of $2-100M)
Total venture investment by region, 2Q16
• When VC investments across Europe are aggregated into regions, UK & Ireland, Israel, DACH, France, and the Nordics are the clear and consistent leaders
• Benelux, Iberia, Southern Europe, and Eastern Europe do produce meaningful VC investments, but the volumes are still low
15@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
Israel, 1,363.8, 34%
DACH, 787.5, 20%
UK & Ireland, 709.6, 18%
France, 355.1, 9%
Benelux, 262.9, 7%
Iberia, 220.8, 5%
Nordic, 217.5, 5%
South. Eur., 43.2, 1% East. Eur., 40.5, 1%
Total VC investment by region, 2Q16
Rounds by bracket & region• To get a better sense of deal
volume, this analysis excludes seed deals which are often poorly reported
• Excluding seed deals, Israel led in the number of announced deals, with 73 investments announced
• The UK came in second with 50, and DACH came in third with 40
16@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
31 2824 23 26
7 5 5
20
11
7 67
21 1
21
10
86
4
1
1
1
1
1
0
10
20
30
40
50
60
70
80
Israel UK &Ireland
DACH France Nordic Benelux Iberia South. Eur. East. Eur.
Num
ber
of in
vest
men
ts
Number of investments in Europe and Israel by bracket, 2Q 2016
Mega (>100) Growth (20-100) Venture (8-20) Early Venture (2-8)
Participation rate of US VC firms, by bracket• Year to date, US VC firms
participated in 11% of the venture rounds in Europe
• US VCs participated in none of the European rounds, 10% of early venture rounds, 33% of venture rounds, and 39% of growth rounds
• As in the first quarter, US VCs did not participate in any of Europe’s four mega-rounds in 2Q16
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0%10%
34%39%
100%90%
66%61%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Seed (.5-2) Early Venture (2-8) Venture (8-20) Growth (20-100) Mega (>100)
Pe
rce
nta
ge
of
rou
nd
s
Did US VC firms participate in European VC rounds? (2Q16)
No Yes
US VC firm participation hits a new low• Excluding seed rounds, US VC
firm participation in European & Israeli venture rounds rose in 2Q16 to 21%
18@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
16%24% 20% 22% 21% 17% 16%
21%
84%76% 80% 78% 79% 83% 84%
79%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Pe
rce
nta
ge
of
Ro
un
ds
Did US VC firms participate in European VC rounds?
(3Q14-2Q16)
No Yes
Participation of US VC firms by country• In 2Q16, US VCs firms were
active in 12 different European countries
• US VC firms were most active in Israel, where they participated in 27 investment rounds out of 83 (33%)
• The UK saw 9 investments with US VC participation out of 74 total rounds (12%)
19@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
27
9 7 2 2 1 1 1 1 1 1 10
10
20
30
40
50
60
70
80
90
100
Isra
el UK
Ger
man
y
Fra
nce
Net
her
lan
ds
Spai
n
Ita
ly
Bel
gium
Swit
zerl
an
d
Ire
lan
d
Po
lan
d
Esto
nia
Nu
mb
er o
f V
C in
vest
men
ts
In which countries are US VCs most active?
2Q, 2016
No US VC involved US VC involved
Participation of US VC firms by country• This chart shows US VC
activity within Europe throughout 2015 and 1H16
• The overwhelming bulk of US VC activity is in Israel, the UK & Ireland, DACH, and the Nordics
20@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
Israel, 12 Israel, 14 Israel, 14 Israel, 14 Israel, 16
Israel, 27
UK & Ireland, 10
UK & Ireland, 13UK & Ireland, 9 UK & Ireland, 8
UK & Ireland, 12
UK & Ireland, 10
DACH, 8
DACH, 6
DACH, 4DACH, 9
DACH, 6
DACH, 8
Nordic, 2
Nordic, 3
Nordic, 5
Nordic, 5
Nordic, 5
Nordic, 1
Benelux
Benelux
Benelux
Benelux
Benelux
0
10
20
30
40
50
60
Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2015 2016
Num
ber
of V
C in
vest
men
ts
Investments with US VC participation
Israel UK & Ireland DACH Nordic Iberia Benelux France East. Eur. South. Eur.
Dimension Categories Explanation/Example
1. Target marketConsumer, SMB, Enterprise, Government,
Telecom, OEM
What sort of customer does the
company target?
2. Vertical market
Adtech, Communications, Data, Development, Durables,
Education, Electronics, Employment, Energy, Fashion,
Financial, Food, Gaming, Health, HMI, Industrial,
Infrastructure, Lifestyle, Logistics, Marketing, Media,
Productivity, Real Estate, Security, Sports, Storage,
Transportation, Travel, Water
What type of problem does the
company solve?
3. Business modelCommerce, Components, Content,
Marketplace, SaaS, Semiconductors,
Services, Software, Systems,
How does the company make
money? What are customers paying
for?
Segment descriptor Consumer + Travel + MarketplaceAirBnB has built a travel-related
marketplace for consumers
Three-dimensional approach to sector mapping
• Excluding mega-rounds, investment activity increased in consumer and decreased in enterprise enterprise in 2Q compared with 1Q
22@gdibnerblog: yankeesabralimey
What target markets are attracting the most VC investment in Europe & Israel?
Syndicate for European & Israeli Enterprise Companies
475 595980 850
1,177930 1,078 1,229
494
798
953
814
9071,112
1,6781,580
78
133
121
153
275135
224 91
78
114
47
106
182
150
166 186
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Tota
l VC
inve
stm
ents
(U
S $
M)
European & Israeli venture financing by target market
3Q14 to 2Q16 (excluding mega-rounds, US $M)
Government
Telecom
OEM
SMB
Enterprise
Consumer
• When Israel is excluded from the sample, 59% of all VC dollars in Europe went to consumer-oriented companies
• OEM-oriented companies continued to show surprising strength, accounting for 5% of all VC dollars in Europe
23@gdibnerblog: yankeesabralimey
Consumer investment leads Europe
Syndicate for European & Israeli Enterprise Companies
62%
36%
56%63% 62% 57% 53% 59%
18%
49%
34% 22% 24% 31% 35%32%
6%10%
4% 12% 8% 6% 5% 3%5%
4% 2% 4% 5% 6% 5%6%8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
European venture financing by target market
3Q14 to 2Q16 (excluding Israel, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
• When the sample set is limited to rounds under $20M, the ratio of consumer to enterprise investments shifted back to where it has been in the past
• Consumer investments as a percentage of rounds accounted for 47% of early rounds
24@gdibnerblog: yankeesabralimey
Early-stage consumer deals come back
Syndicate for European & Israeli Enterprise Companies
39%50% 46% 41% 46% 50%
38%47%
41%
37% 50%47% 39% 36%
47%40%
3%
9%2%
7% 9% 6% 9% 6%11%
2% 2% 2% 3% 7% 5% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
European venture financing by target market
3Q14 to 2Q16 (excluding Israel, rounds up to $20M, percent of US $M)
Government Telecom OEM SMB Enterprise Consumer
Breakdown by region & target market• Once again, almost all
regions except Israel saw more consumer investment than enterprise/SMB investment
• Benelux also saw more enterprise investments than consumer
25@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
553645
337204
48153 104
734
111
299
94
18866
61
0
200
400
600
800
1,000
1,200
1,400
1,600
Israel DACH UK & Ireland France Benelux Iberia Nordic
Tota
l am
ou
nt
inve
ste
d (
US
$M
)
Investment in Europe and Israel by target market by region
2Q, 2016 (US $M)
Government Telecom OEM SMB Enterprise Consumer
Distribution of investment rounds by country• Across Europe & Israel, 46%
of VC investment rounds were in consumer companies in 2Q16
26@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
62%
57%
55%
56%
51%
46%
34%
23%
38%
26%
36%
37%
28%
40%
41%
65%
0%
13%
7%
7%
13%
6%
19%
4%
0%
3%
0%
7%
6%
6%
6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
South. Eur.
France
DACH
Iberia
Nordic
UK & Ireland
Benelux
Israel
Investment in Europe and Israel by target market by country
2Q16 (Number of investments)
Consumer Enterprise SMB OEM Telecom Government
Growth rounds by target market• From 4Q14 to 2Q15, there
was an upward trend towards consumer-oriented companies in growth investing, but this trend reversed itself in 3Q15 and continued into 1Q16
• In 2Q, this trend reserved itself for the first time in four quarters
27@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
56%
37%46%
56%
43% 39% 37%44%
25%
41%
46% 25%
38%50% 51%
49%
6%7%
5%
9% 12%3% 6%
2%6% 11%
6%7% 5% 6% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
Investment in Europe and Israel by target market
(Rounds over $20M, number of investments)
Government Telecom OEM SMB Enterprise Consumer
• Fintech was yet again the most popular vertical across Europe & Israel, with 40 investments in the category
• Electronics (which includes consumer devices) was second, with 28
• Marketing dropped to third, with 26
• Security was fourth, with 23
28@gdibnerblog: yankeesabralimey
Finance returned to being the top vertical
Syndicate for European & Israeli Enterprise Companies
Financial, 40
Electronics, 28
Marketing, 26Security, 23
Lifestyle, 22
Employment, 22
Travel, 22
Adtech, 20
Infrastructure, 20
Communications, 17
Real Estate, 16
Productivity, 16
Health, 16
Education, 15
Industrial, 15
Entertainment, 14
Fashion, 14Logistics, 14
Food, 13
Energy, 12
Data, 11
CRM, 9
Development, 8
Social, 8
Gaming, 8
Payments, 7
ERP, 6
European & Israeli venture financing by target market
2Q 2016 (number of investments)
• This graph shows number of investments in the top 10 verticals across 2Q15 and 2Q16
• All of the top ten verticals increased in frequency
29@gdibnerblog: yankeesabralimey
How have the most popular verticals grown?
Syndicate for European & Israeli Enterprise Companies
Financial, 24Financial, 40
Marketing, 22
Marketing, 26Electronics, 8
Electronics, 28
Li festyle, 12
Li festyle, 22
Securi ty, 10
Securi ty, 23
Travel , 11
Travel , 22
Adtech, 12
Adtech, 20
Health, 16
Health, 16
Employment, 6
Employment, 22
Infrastructure, 6
Infrastructure, 20
0
50
100
150
200
250
300
Qtr2 Qtr2
2015 2016
European & Israeli venture financing by vertical market(top 10 verticals, number of investments)
• Finance was the most frequently funded vertical, with over half of the investments aimed at consumer finance
• Electronics leapt to second place, with an emphasis on consumer electronics (connected devices)
• Marketing was the third most frequently funded vertical, with enterprise-oriented marketing taking the lion’s share within that category
• Security took fourth place with a heavy emphasis on enterprise security
30@gdibnerblog: yankeesabralimey
Which verticals for which segments?
Syndicate for European & Israeli Enterprise Companies
Communications
Adtech
Infrastructure
Employment
Lifestyle
Travel
Security
Marketing
Electronics
Financial
0 5 10 15 20 25 30 35 40 45
European & Israeli venture financing by target market
2Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Telecom
• This chart shows the ten most commonly funded verticals across Europe & Israel by quarter
• Electronics has shown consistent growth
31@gdibnerblog: yankeesabralimey
The most popular verticals in the past 2 years
Syndicate for European & Israeli Enterprise Companies
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
0
50
100
150
200
250
300
European & Israeli venture financing by vertical market
(number of investments, top 10 verticals)
Adtech
Health
Logistics
Electronics
Lifestyle
Employment
Security
Infrastructure
Marketing
Financial
• Lifestyle, which is admittedly a bit of a catch-all general consumer category, continues to show tremendous strength in terms of VC volume
• Finance was the second-most funded consumer category
• Travel and electronics are showing recent strength
• Gaming declined in 2Q
32@gdibnerblog: yankeesabralimey
Consumer VC investment trends
Syndicate for European & Israeli Enterprise Companies
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
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60
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120
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European & Israeli venture financing by consumer verticals
(number of investments, top 10 verticals)
Social
Travel
Health
Fashion
Food
Electronics
Logistics
Gaming
Lifestyle
Financial
• Enterprise marketing seems to have levelled off as an area for VC investment
• Security and adtech also remain stable but significant
• Enterprise infrastructure investments declined in 2Q
• Industrial-oriented startups and employment related (HR) startups seem to be consistently increasing as an area of focus
33@gdibnerblog: yankeesabralimey
Enterprise VC investment trends
Syndicate for European & Israeli Enterprise Companies
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
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20
40
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80
100
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European & Israeli venture financing by enterprise verticals
(number of investments, top 10 verticals)
CRM
Financial
Industrial
Employment
Development
Data
Infrastructure
Adtech
Security
Marketing
• Security retained the top spot in Israel, with 11 investments
• Marketing, infrastructure, and adtech were next
34@gdibnerblog: yankeesabralimey
A closer look at Israeli venture in 2Q16:CyberNation
Syndicate for European & Israeli Enterprise Companies
Logistics
CRM
Productivity
Health
Financial
Employment
Electronics
Communications
Adtech
Infrastructure
Marketing
Security
0 2 4 6 8 10 12
Israeli venture financing by target market
2Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Telecom
• For the first time in six quarters, fintech not the number one category in the UK
• Enterprise employment (HR) startups took the top spot
• Adtech, which was third in 1Q, disappeared from the top ten in 2Q
35@gdibnerblog: yankeesabralimey
Closer look at UK VC:Fintech fatigue?
Syndicate for European & Israeli Enterprise Companies
Food
Fashion
Marketing
Travel
Real Estate
Education
Energy
Electronics
Productivity
Infrastructure
Lifestyle
Financial
Employment
0 2 4 6 8 10 12
UK venture financing by target market
2Q, 2016 (number of investments, top verticals)
Consumer
Enterprise
SMB
OEM
Government
• Fintech and industrial tied for the most popular categories in Germany, with five investments each
• Real estate and edtech took the third and fourth spots
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The German VC market in 2Q16
Syndicate for European & Israeli Enterprise Companies
Adtech
Infrastructure
Communications
Gaming
CRM
Electronics
Data
Fashion
Logistics
Employment
Sports
Social
Payments
Lifestyle
Travel
Security
Entertainment
Development
Education
Real Estate
Industrial
Financial
0 1 2 3 4 5 6
German venture financing by target market
2Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
• Fintech was the most commonly funded vertical in the Nordics, with 11 investments
• Electronics was next, with 8 investments split between consumer and OEM companies
37@gdibnerblog: yankeesabralimey
As usual, Nordic VC was unconventional
Syndicate for European & Israeli Enterprise Companies
Food
Infrastructure
Entertainment
Marketing
Gaming
Industrial
Education
Productivity
Adtech
Energy
Health
Electronics
Financial
0 1 2 3 4 5 6 7 8 9 10 11 12
Nordic venture financing by target market
2Q, 2016 (number of investments, top 10 verticals)
Consumer
Enterprise
SMB
OEM
Government
• SaaS was the most funded business model in 2Q16
• As software eats the world, services are becoming an increasingly important business model for venture-backed startups
• This continued into 2016, with services taking 22% of the venture dollars invested in Europe & Israel in 1Q16
• Marketplaces – businesses that serve a price discovery function – were just 9%
• Commerce accounted for just 8% of the dollars invested
38@gdibnerblog: yankeesabralimey
SaaS above all
Syndicate for European & Israeli Enterprise Companies
SaaS, 992, 32%
Services, 691, 22%
Software, 420, 13%
Systems, 294, 9%Marketplace, 281, 9%
Commerce, 239, 8%
Components, 117, 4%
Media, 60, 2%
Semiconductor, 35, 1%
Materials, 1, 0%
European & Israeli venture financing by target market2Q16 (in US $M) (excluding mega-rounds)
• Reversing last quarter’s trend, SaaS jump ahead of services, but both categories show continued strength
• Commerce seems to have bottomed out and showed a bit of renewed strength in 2Q
• Marketplace investment continued to show gradual gains
39@gdibnerblog: yankeesabralimey
In 2Q, SaaS set a record
Syndicate for European & Israeli Enterprise Companies
0
200
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600
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1000
1200
Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2
2014 2015 2016
European & Israeli venture financing by business model
(top five, in US $M, excluding mega-rounds)
Services
SaaS
Software
Commerce
Marketplace
• Enterprise marketing SaaS was again the most popular segment for VC investment in 2Q16 with 22 investments across the region
• Consumer financial services were next, with 21 investments
• In a first, consumer electronics systems were the third most popular category with 18 investments
40@gdibnerblog: yankeesabralimey
Enterprise marketing & consumer fintech
Syndicate for European & Israeli Enterprise Companies
0 5 10 15 20 25
Consumer Lifestyle Commerce
Consumer Education Services
Enterprise Employment SaaS
SMB Financial Services
Enterprise Security Software
Consumer Travel Commerce
Consumer Fashion Commerce
Consumer Electronics Systems
Consumer Financial Services
Enterprise Marketing SaaS
Number of VC investments
Investment in Europe & Israel by segment by country2Q16 (top 10 segments)
UK & Ireland France
Nordic Israel
DACH South. Eur.
Benelux Iberia
East. Eur.
• Across Europe & Israel, US VC firms invested in 37 enterprise companies, 15 consumer companies, 1 OEM company, and 1 telecom-oriented company
• Enterprise SaaS & Software attracted by far more US VC interest than any other space
• Consumer services were, again, the third-most often backed sector by US VC firms
41@gdibnerblog: yankeesabralimey
What business models attract US VC investments?
Syndicate for European & Israeli Enterprise Companies
0 2 4 6 8 10 12 14 16 18 20
Components
Media
Marketplace
SaaS
Systems
Commerce
Services
Marketplace
Systems
Services
Software
SaaS
OE
MT
ele
com
Con
sum
erEn
terp
rise
US VC Investments in Europe and Israel by end market,
business model, & country, 2Q16 (excludes seed & mega-rounds)
Israel
UK & Ireland
DACH
Benelux
France
East. Eur.
South. Eur.
Nordic
Iberia
Show me the SaaS• As usual, the most popular
vertical by far for SaaS investments across the geography was marketing
• Employment (HR) SaaS was in second place
• Productivity SaaS applications, data analytics, and infrastructure SaaS were tied for third place
• CRM SaaS dropped to eighth place
• Development tools dropped to tenth place
42@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
0 5 10 15 20 25 30
Development
Communications
CRM
Security
Adtech
Infrastructure
Data
Productivity
Employment
Marketing
SaaS VC investment in Europe and Israel
by vertical and target market, 2Q16 (top 10 verticals)
Consumer Enterprise Government SMB Telecom
Services investing in 2Q16• This graph shows the top ten
verticals within the services category in 2Q16 across Europe & Israel
• Financial services were far and away the most frequently funded vertical – mostly for consumers and SMBs
• Education services (edtech) was the second most funded services category
• Gaming services dropped from second to sixth
43@gdibnerblog: yankeesabralimey Syndicate for European & Israeli Enterprise Companies
0 5 10 15 20 25 30 35 40
Food
Lifestyle
Real Estate
Entertainment
Health
Gaming
Communications
Payments
Logistics
Adtech
Education
Financial
Services VC investment in Europe and Israel
by vertical and target market, 2Q16 (top 10 verticals)
Consumer Enterprise SMB
Based in , I was previously a partner at . Before that, I helped run the
European seed program for . I moved to London after seven years in
during which I worked as a VC with and . I’m originally from .
My VC investments include and .
Angel investments include and many more.
If you found this useful, I hope you’ll subscribe to my blog.44
Gil DibnerTo invest in the best European & Israeli enterprise startups,
consider backing me on here. Lots of exciting stuff in the
pipeline – and you’ll be in pretty good company.
Thank youblogPrepared by Gil Dibner